Middlesex Consulting Insights

The Secrets Of Closing A B2B Sale

Sam Klaidman - Monday, March 20, 2017

If you are responsible for growing your service business, you are in Sales.  Maybe not product sales but certainly you are selling services.  Also, you probably depend on the sales organization to initially sell service contracts, or other services, along with the product.  So, for these two reasons, you had better understand what B2B selling actually means in the late 2010’s (i.e., NOW!).

You Bet Your Job

You Bet Your JobThe first thing you must internalize is that the buyer, or the buying committee, is risk adverse.  A large part of the buying decision is based on mitigating risk for the people involved in the purchase decision and the business.  IDC recently shared some data that indicated that 28% of C-Suite executives rate risk avoidance as their number one objective.  

When I have one-on-one talks with decision makers, they say that they feel that when making some purchasing decisions, their job is on the line.  They feel they will get fired, or at least have their career put on hold, if the decision yields a bad result!  I modified this “ancient” television sign to update it to current norms.

Once you internalize what the buyers are feeling, you can move on to the four things you must do to help them and your business.

Create Customer Value 

Without getting theoretical or philosophical, I will state with absolute certainty that no one will purchase anything unless she receives benefits worth more that they cost.  The benefits can be quantifiable, i.e., reduce cost, grow revenue, or improve products or processes, or they can be emotional, i.e. save time, improve experience, or rebuild the company’s image in the marketplace.  

It is critical to recognize that the actual value you and your business create only exist in the mind of the buyer.  If your service increases equipment uptime, you can suggest the financial benefit but only the buyer can assign a benefit that is valid for the purchasing company at the time of the assessment.  

Because situations constantly change, the benefit also changes.  For example, if you are selling a widget that increases production by 10% per day and the company already has a large inventory of the item and orders are dribbling in, then your widget is not very valuable.  But, if the next day the widget is highlighted at a National trade show and the video of the demo goes viral, the buyer may need to purchase two or more widgets from you.

Value is also relative to all other options.  If your widget increases the customer’s output by the same 10% per day as above, and a competitor offers their widget+ which increases output by 15% and costs 5% less than your widget, then all other things being equal, your product is essentially worthless to that buyer!

Earn Short-Term Trust

Trust is a strange emotion.  There are many books that tell you how to create trust but emotions, like value, depend on the current circumstances and I just do not trust (sorry for the pun) a book to be able to deal with the range of human emotions.

The reason that earning the buyer’s trust is so important is you need them to carry your message throughout their individual organizations and you are asking them to place their jobs at risk.  They will only carry the message if they have complete confidence that you are telling the whole truth and that the benefits you and they jointly develop are safe.

It is not unusual with very large proposals for the seller to hire an independent third party to confirm all the assumptions and understandings and to calculate the benefits and return on investment (ROI).  The seal of approval, plus all the trust you created during the early selling process, work together to create enough trust for the buyers to want to move forward.

Build Long-Term Trust

This is different from short-term trust.  This is all about giving your prospect the confidence that your business will be viable during the complete lifecycle of your product.

Q. How long can a piece of B2B capital equipment be used and hence, needs support?  

A. Longer than you think.

Here are a few examples:

From SunPower, a manufacturer of solar panels

SunPower Corporation (“SunPower”) warrants that for 25 years beginning on the Warranty Start Date1 (the “Warranty Period”), its photovoltaic modules specified above (“PV Module(s)”), shall be free from defects in materials and workmanship under normal application, installation, use and service conditions, and the power output of the PV Modules will be at least 95% of the Minimum Peak Power2 rating for the first 5 years, and declining by no more than 0.4% per year for the following 20 years, so the power output at the end of the final year of the 25 year warranty period will be at least 87% of the Minimum Peak Power rating.  

That is correct – 25 years!  And the buyers have to trust that the seller will be in business at least that long to honor any warranty.

Extracts from IRS Publication 496 (2016) How To Depreciate Property:

3-year property 

  • Tractor units for over-the-road use. 

5-year property

  • Computers and peripheral equipment or any property used in research or experimentation. 

7-year property

  • Agricultural machinery and equipment.

  • Office furniture and fixtures
  • Any property that does not have a class life and has not been designated by law as being in any other class.

10-year property

  • Vessels, barges, tugs, and similar water transportation equipment. 

As you can see, most B2B capital equipment can be depreciated over seven years.  But…

From the Real World

Many products have a useful life that far exceeds the allowed depreciation time.  Some examples are:

  • Machine tools – software, controls, and sensors may undergo upgrades but the motors, castings, and power handling last for a very long time.

  • Analytical equipment – the rate of change of many instrument classes has slowed to a crawl.  There is little room for innovation and even when there is innovation, many labs keep the old stuff because it is “good enough.”  Think scales, mixers, and pipetting equipment.

  • Transportation equipment – think about the age of the US Air Traffic Control System or the jet plane you just flew on.

When companies make a buying decision, they look at the service record and reputation of all the qualified suppliers and ask themselves “will this business be around in 10 to 15 years and will they be ready, willing, and able to service and support this equipment?”  That is why so many IT buyers stick with IBM.  IBM has been servicing its products for over 100 years and no one doubts that they will continue to do it as long as someone will pay.  In other words:

Nobody every got fired for buying IBM

Communicate How You Create Value

You know your solution offers a significant benefit and you have developed real trust with the buying team.  The last step is to communicate the value proposition so the people you are dealing with can become your internal champion.  This is a big deal because everyone is trying to mitigate risk and the internal people will believe the buying team because they don’t know or have a relationship with you.

This is where you pull your story together.  You share your value proposition, the third party ROI calculation, and the service and support history of the selected supplier.  You give them whatever information they require to feel comfortable.  They carry your flag.  Not because they love you but because they need the business results they will obtain from owning and using your products and services.  

If you did your job properly during the whole process, you will receive the order you had forecast, earn whatever emotional and monetary praise you deserve, and be told to go out and do it again.

Babe Ruth Quote

Such is live as a product or services sales professional.

7 Services To Sell To Customers Who Choose In-House Field Service

Sam Klaidman - Monday, March 13, 2017

This post has been one of our most popular posts from 2014 and is still relevent today. If you missed it the first time, or if you just forgot about it, then I hope it strikes a positive note with you.  

Customer Satisfaction Drives Loyalty

Sam Klaidman - Monday, March 06, 2017
The Temkin Group loves to publish insightful information that is very important and easy to get your head around.  They derive this information for what appears to be an endless stream of consumer surveys and they present it in ways that are clear and timely.

In their February 23, 2017 post “Customer Experience Leads to Recommendations (Charts for 20 Industries),” the Temkin Group published two figures, which are the subject of this post. Their post also includes 20 charts, one per major industry, which I am not going to talk about here. You can see them by following the previous link.

This figure shows the impact of Customer Experience (CX) on loyalty:
Impact of Customer Experience on Loyalty

When discussing loyalty, the Temkin Group looks at four outcomes of being loyal; Likely to Repurchase, Recommend, Trust, and Forgive.  Before discussing this further, I am including this figure so you can understand the Temkin Group’s terminology:

Calculation of Loyalty Metrics

The second figure includes the wording of the questions asked about each outcome, the scale used, and how they define “goodness.”  For repurchase, forgive, and trust they use a 6-point scale, with anchors on each end and consider the top two boxes as goodness.  For recommend, they use the NPS 11-point scale and consider the top three boxes to be goodness.  It really doesn’t matter what you consider goodness in your own program, it is only important that you be consistent so you can trend the data and get meaningful results.

Interrupting the Data

I will focus on the Repurchase chart of the first figure to talk through how to think about this data but everything I write is equally applicable to all four areas of loyalty. 

The first point to note is that the chart does not tell us what percent of the respondent’s ratings fell in each of the five satisfaction categories (very poor, poor, okay, good, and excellent) but only the percent of each category that satisfies the requirements defined in the second figure. Also, you should not assume that the percent in each category is higher than any of the lower categories.  Many times, we see that the percent of okay or good exceeds the percent of excellent.

The second point is that the columns represent the percent of responses that are “likely” to repurchase as defined in the second figure.  This means that 86% of everyone who reported having an excellent interaction also rated a six or seven on the likely to repurchase question.  At the other end of the CX scale, 13% of the people who had a very poor experience were also likely to repurchase from the company.

The conclusion here is that the better the customer’s experience, the more likely they are to demonstrate loyal behavior.  For your internal improvement program, I always recommend focusing on the top box, the best choice, instead of considering the top two or three boxes as goodness.  I recommend this because the loyalty percentage would be less if the data was presented for just the top box (which generates the largest loyalty)…why delude yourself?  You should always be looking for the real truth and not giving yourself a false sense of security.

The data also leads us to two questions:

  1. How come 14% of people having an excellent experience would not definitely repurchase?
  2. How come 13% of the people having a very poor experience would definitely repurchase?
Why would very satisfied customers not repurchase?

As you might expect, there are a number of possible reasons:

  • They have no need for another one.  For example, you bought your youngest child a snowsuit and are planning to relocate to the south before the next snow season.
  • You are working for an organization that prohibits you from endorsing a product.  This is very common in both the healthcare industry and in government.
  • You purchased the product in an outlet and have no idea where to go to get it again in the future.
Why would very dissatisfied customers repurchase?

Again, a number of reasons:

  • The supplier has a real or virtual monopoly.  For example, a real monopoly exists in most communities with respect to home water delivery.  Also, many families have only one cable provider.  You may hate them but believe that something is better than nothing.
  • Some communities have multiple cable providers but the cost and hassle of switching means that some customers are dissatisfied and yet will renew their contract when it comes up for renewal.
  • People are loyal to medical professionals even though they run a terrible office.  If you have a “painless” dentist who is never on schedule, you will very likely keep going back because the frustration of sitting in the waiting room is small compared to benefit having a pain-free procedure. 
The results and conclusion can easily be changed

While these examples are real, they are not necessarily permanent.  If a new dentist moves into your area and some of your friends try the new person and are amazed with their experience, then you are highly likely to switch.  I am sure you can construct similar reasons why people would switch for all the examples I just listed.

The point here is that none of us has customers for life. If we don’t think about our customers as being leased instead of being owned, then we are setting ourselves and our business up for a major shock.  

For example, the de Havilland Comet jet made its first commercial flight in 1952 and the Boeing 707 made its first commercial flight in 1957.  The Comet never really caught on and Boeing thought it had cornered the market with the 707.  But by 1972, the first Airbus A300 made its first flight and now Boeing and Airbus equally share the commercial market for large jet transports.  There are no customers for life.

Make Things BetterEven if your product or service is better than your current competition, you are always vulnerable to being eclipsed by someone with either a better product/service or a better experience.  The solution to both is continuous improvement with both your products and services and the way you engage with your customers.

Remember that business is a marathon, not a sprint.

An Introduction to Servitization and PaaS

Sam Klaidman - Monday, February 20, 2017

This is from a Rolls-Royce Press Release dated Oct. 30, 2012:

Rolls-Royce, the global power systems company, today celebrated the 50th anniversary of 'Power-by-the-Hour', its pioneering approach to engine maintenance management that forms the basis of the company's market-leading CorporateCare® service.

‘Power-by-the-Hour', a Rolls-Royce trademark, was invented in 1962 to support the Viper engine on the de Havilland/Hawker Siddeley 125 business jet. A complete engine and accessory replacement service were offered on a fixed-cost-per-flying-hour basis. This aligned the interests of the manufacturer and operator, who only paid for engines that performed well.

Rolls-Royce CorporateCare®, launched in 2002, added a range of additional features. These include Engine Health Monitoring, which tracks on-wing performance using onboard sensors; lease engine access to replace an operator's engine during off-wing maintenance, thereby minimizing downtime; and a global network of authorized maintenance centers to ensure that world-class support is readily available to customers whenever required.

Does this business model actually work?  You bet!  Here are the Rolls Royce financial results for FY 2008 to FY 2015:

Rolls-Royce revenue growth

The aftermarket services, which includes power-by-the-hour, generates more sales than the actual product does.

This is a very early example of Servitization, which Wiktionary defines as “The delivery of a service component as an added value when providing products.”

Another term frequently used when talking about combining products and services is Product as a Service. Here is Simplicable’s definition:

Product-as-a-Service is a business model that provides a service in areas that were traditionally sold as products. A service model provides ongoing interaction with customers including support. Services may also offer the ability to exchange a product on a regular basis for a different or newer model.

The producer gets a regular income stream as services may include monthly subscription fees or usage based charges. Customers may be attracted to service models due to flexibility, enhanced support, lower upfront costs, and reduced risk. For example, a customer who joins a car sharing service doesn't have to worry about maintenance and has reduced upfront costs as compared with buying a car.

And we may as well define the Internet of Things (IoT).  According to the Future Internet Report by UK Future Internet Strategy Group the IoT is:

"An evolving convergent Internet of things and services that are available anywhere, anytime as part of an all-pervasive omnipresent socio–economic fabric, made up of converged services, shared data and an advanced wireless and fixed infrastructure linking people and machines to provide advanced services to business and citizens." 

This means that products will include data collection sensors and computers and the data will be shared over the internet.  The data may be combined with other data (e.g., GPS) to permit an understanding of operational status or micro-environmental activities.  I will not write more about the IoT here because I have written about it here and also here.

Also, I think about Servitization and Product as a Service interchangeably.

Here are two graphics from an unknown, very creative, graphic artist.  They each describe four different business models.  The column labeled On-Premise is the model where the customer owns and maintains the item. SaaS is what I have identified as PaaS.  Enjoy:

Car as a Service

House as a Service

Do the numbers work?

We are talking about a change in business models from the current “sell product then fix it” model. Here is a table that shows the percent of total revenue derived from service for selected large, multinational companies that break out product and service revenues separately. 

Service revenue as a percent of total revenue

Two things worth noting; 1) the GE Industrial Systems segment of GE is investing very heavily in the IoT and the results support and 2) at IBM, the two service business segments together account for almost 2/3 of IBM’s total revenue.  

An example of GE’s experience

There are over 40 sensors on each GE jet engine.  When a 787 Boeing jet flies from London to New York, the engines alone generate over 1TB of data!  When the plane taxis to the gate, the data is uploaded to a GE facility where they do a quick analysis of the performance of each engine looking for any anomalies.  If they find any issues, the airline’s maintenance department is notified and the decision is made about the urgency of any investigation or repairs.  If all is good then GE, in the background, analyzes the performance of all engines of any model and compares each engine’s performance to all similar engines in the airline’s fleet and also to all similar engines flying.  Imagine all the valuable data that GE collects!

Why is Servitization important?

It is extremely difficult for any company to create and maintain a differentiation factor over the long term.  This is because of the Internet, Google, people connected into networks, and the general availability of competitive information. Even if someone patents an innovation, the current selection of available technology means that avoiding patent infringement for a good idea is usually possible.  However, combining a product with unique sensors connected to a central monitoring computer over a proprietary software network is very difficult to copy. And you can charge more because this “system” provides new value to the customers.

Why should service people care?

Aside from the fact that PaaS will create jobs for service people, it also means that they will have to learn new skills and that their travel time will reduce.  The new skills will now involve troubleshooting complex systems from a central location.  The technician will be able to troubleshoot down to the FRU (Field Replaceable Unit) level and whoever is sent to the equipment location will know exactly what the job entails.  The likelihood of a surprise is limited.

Another reason to care is that service will become responsible for a greater percent of total revenue than previously.  Remember the GE Industrial Divisions results in the earlier table.  The spotlight will now shine much brighter on the service team and there will be more accountability for financial results than previously.  Along with accountability comes rewards for doing an outstanding job and there is a downside for a less than sterling performance.  

I believe that all-in-all the service teams of the companies which adapt the PaaS model will enjoy their jobs better than they do today, will learn a lot of new things, and their individual and team performances will be broadly recognized.  I look forward to seeing you on a TV, magazine, or Internet advertisement one day soon.

Your Service Experiences – By Design or By Chance?

Sam Klaidman - Monday, February 06, 2017

Defination of service designWe design our products.  We design our organizations. We spend an inordinate amount of time and money designing our software.  But, do we design our services?  If we were honest, most of us would answer NO!  

This is unacceptable because as Thomas Stewart and Patricia O'Connell write in their 2016 book "Woo, Wow, and Win" - A company's job is to design and deliver delight on its own terms, by fully meeting the expectations of customers." Think about this; consistently meeting customer expectations creates customer delight.

If we don’t design our services, how did they get where they are today?  How do our customers feel about the services we deliver?  Do our services help or hinder future sales?  And, most importantly, how should we go about designing our services?  Let’s take these questions one-at-a-time.

How did our services get to where they are today?

When technology companies start-up, they are only focused on two things; getting investors and shipping their first product.  Anything else is usually too small to show up on their radar screen.  After a while, they have beta units placed with important early adopters and they start getting a very few “service calls.”  Usually, one of the engineers is sent to the customer site. They either fix a silly problem (maybe due to a confusing user interface) or quickly escalate the issue to the engineering team, so they can properly fix the problem and also fix the other beta installations.

Eventually business starts to pick up.  Sales add a Technical Account Manager (TAM), sometimes called an Applications Engineer.  Once they help make a sale, they come back, install the equipment, and train the users.  And when there is a need for someone to do remedial service, the same person is dispatched.  After this gets old, the Sales Management tells the CEO that “I need my TAM’s to grow sales.  You need to set up a Service Group.”

However it happens, the new Service Department (person?) takes over from the TAM’s but continues to do what they were doing.  The new Field Service and Technical Support resources are trained in the existing procedures (I hate to call it a process.)  And so it grows.

In other industries, the growth of the service department may have followed a very different path, but the outcome has been the same – service is delivered the about same way it always has been.  And the results are what they have always been except for implementing new technologies such as remote support.

How do customers feel about our service?

In the majority of cases, the company doesn’t know.  They think they do but it is only a guess. They don’t do surveys and they don’t collect and analyze feedback received by various individuals who interact with customers.

The reality is that some small, long time customers are very happy.  They get good treatment and feel comfortable with the service.  They know what to expect and are rarely disappointed. It is the newer customers who quickly get disappointed.  

The new customers enter the relationship without having their expectations set by their new supplier. They extrapolate experiences from their other suppliers and use them as the expectations for the new one.  For example, assume they have a large number of HP printers serviced by HP Managed Print Services.  They then buy a Xerox printer from a local distributor who will also perform service.  If the distributor never set expectations based on their capabilities and procedures, the buyer will just assume that their new printer will be serviced to the same standards as HP.  A situation that likely leads to disappointment.

Do our services help or hinder future sales?

If you have not taken an outside-in approach and redesigned your services to deliver to people what they want, the way they want it, when they need it, then you are hurting sales.  If your product or service is a monopoly, then you may not be hurting current sales, but it does mean that your customers are always looking for improved products and or services and will change when they see an opportunity.

That’s right – many of your customers will toss out a perfectly good product if you cannot keep it running when they need it.  They will buy another product from a competitor if they believe they will get better service and support.  Remember, the reason they purchased your product is because they needed to use it to achieve their business outcomes.  If it is not working, and you cannot make it work, then it is nothing but an expensive boat anchor.  That’s why there is so much churn in the mobile phone and cable markets.  Change is relatively easy and people have no patience for what they believe is inferior performance.

How should we go about designing our services?

Disney quote about designing experiencesService design is all about figuring out how your customers will experience your services, what experiences you want them to receive, how you will ensure that your business always delivers the desired experiences, and how you communicate the expected experiences to your customers.  In other words, how do you set and deliver a set of expectations that will routinely create value and loyalty for your customers?

How you design each service is like a customer journey map (CJM) on steroids.  When you create a CJM, you identify all the steps your customer’s take in doing whatever they are trying to do.  Then you evaluate how satisfied they are (or probably are) at each step and finally, you figure out how to improve their experience.  What is missing is the first key step – deciding how you want them to feel after taking each step.  And since the individual steps have to make sense when joined into a journey, you have to make sure that each individual journey creates satisfied customers.

Here is a made up example.  Let’s say you are designing a new gas (petrol) delivery system. You know you want to use the existing underground storage tanks so that is a system constraint. Also, you would like to reuse the islands where the fuel dispensers are mounted – a second constraint.  Based on surveys, personal experiences, and dealer feedback, you discover that business falls off during inclement weather and also during extreme temperatures, both high and low.  Also, you learn that customers really like paying for the fuel at the dispenser without walking into the office. 

As you and your team think about the problem, you figure out that customers do not have strong loyalty to a particular fuel brand.  It is a commodity.  What they have is loyalty to a specific location.  Maybe it is easy to enter and leave the station, maybe it is right next to where they stop a few times a week to transact other business, or maybe they go there because it is a habit.  So you decide that if you can create a simple system which works well in all types of weather, you can provide a great experience and shift customer loyalty to your newly designed stations.

I won’t create a new design because that is not my strength but let’s assume we find a way to shelter the customer from rain and snow, provide shade from the direct sun, and blow hot or cold air at the point where the hose is attached to the car.  Let's further assume that these individual steps are highly reliable and automatic.  Automatic means that when you insert the nozzle into the car’s fill tube, a steady stream of comfortable air will blow to that same point. You also find a way to speed up the end of sale payment process and that the customer stays dry and comfortable while waiting for the receipt.

If you installed my futuristic fuelling system, I would bet that your business would increase because of the creature comforts you provided.  And customers would no doubt be willing to pay a few cents per gallon more because the experience is so pleasant.  

That is service design.  You can, and should, do the same thing with how your call center works, how you create, dispatch, and confirm a field dispatch, and all the other interactions you have with your customers.  And you should tell them exactly what to expect for each step and what to do if things do not exactly follow your plan.  Within a few months, you will start seeing an increase in CSAT and an uptick in business.

Make this a fun experience for you and your team.  That’s how innovation starts.

The Importance Of First Time Fix Rate

Sam Klaidman - Monday, January 23, 2017

Most Field Service organizations closely monitor their first-time fix rate (FTFR), which Aberdeen defines as:

The resolution of a work order/customer issue on the first service visit.  Any repeat visit, secondary truck roll, or service call cannot be for the same issue. 

While this definition is generally accepted and will be used in this post, at the end of this post I offer another definition that is slightly stricter and will cause you to focus improvement efforts on additional issues.

Why does FTF matter?

Aberdeen published this chart showing the major Field Service goals sorted into two categories; those companies with first-time fix rate greater than 71% and those with FTR at or below 70%. 

Goals for Field Service

From this chart, we can conclude that a 70% FTFR is approximately average.  Note that organizations with the 71+% FTFR have set improve response time and reducing costs by managing repeat visits as a much less important goal than those with a lower rate.  However, the high FTFR folks are still focusing on improving CSAT and increasing revenue.

Let's look at the four goals

Improving FTR improves customer satisfaction - As this chart, from TSIA shows, over a narrow range, there is a strong correlation between FTFR and CSAT.  

First time fix rate and CSAT 

If you are trying to increase your Overall CSAT, then a 0.2 change is a big deal!

Increase revenue – When you have to send a field engineer back for a second visit, she may be earning revenue for a billable call but is not earning as much as if she were going to a new customer.  That is because your company probably caused the repeat visit and you should not be billing for all the cost of the visit.

Reduce costs – This is the jackpot!  If your engineer is performing an installation, warranty call, or contract call, the labor, travel, meals, etc. all get charged to your expense account.  If your organization is small and you frequently fly engineers from call to call, then these costs can mount very quickly.  For example, if you assume that any flight segment costs $500, and your engineers fly from city to city, then the re-visit costs one extra segment plus possibly a car, hotel and extra meals.  Over the course of a year that can become a budget buster!

Improve Response Time – This is easy.  When your engineers are all fully booked with jobs, including repeat visits, then response time for new calls declines.  There goes your CSAT.

What causes re-visits?

Revisits are sad because the majority of them can be prevented!  Here is Aberdeen’s analysis of their survey data:  

  • Parts unavailability (i.e., incorrect or no part available) – 29%
  • Customer/asset not available for service – 28%
  • Improper diagnosis at time of dispatch – 19%
  • Technician did not have right skills – 15%
  • Resolution was only temporary – 8%
If you think about each of the reasons for a revisit you will come to the same conclusion that I did – Improper diagnosis at the time of dispatch is a major contributor to the lack of parts and technicians with the wrong skills. If the person providing phone support to the customer was confident in his diagnosis, he would absolutely make sure that any and all possible required parts would be available when the “right” engineer arrived at the customer.

Dispatching an improperly trained engineer is primarily a management issue.  Field engineers must be trained before they are dispatched to customers.  If they are not fully trained, they must know how to perform most diagnostics and have the skills to work with a remote technical support person while on site. When an untrained engineer is dispatched, it is frequently because the support person made a decision that anyone who arrives to fix the problem is better than having the customer wait.  This is never a good situation to be in and in this case, the customer, dispatcher, and engineer are all going to be dissatisfied. In other words, everyone loses!

Either the design of the service experience or the engineer’s training are also responsible for most of the cases where the customer or the asset is not available.  The way to minimize this situation is to have the engineer directly contact the customer and make sure both the asset and the person will be available when the engineer believes he will show up.  The engineer must contact the customer at least once more before arriving – to either confirm the arrival time or to change it if necessary.  This is both common courtesy and good business.

Who should own FTFR?

This is a major field service KPI (Key Performance Indicator) and belongs to the Head of Service.  However, the Field Service (FS) Manager has a responsibility to make sure the field team is properly trained and to coordinate with the technical support and logistics managers to ensure that the organization (and the engineers) have a very high chance of making each service visit positive for all parties.  This is such an important measurement that I recommend making the three managers equally responsible for this KPI and making it an important, and equal, part of each person’s variable compensation.

I know that I did not include the Training Manager in this discussion since that person has a significant role to play. I believe that the FS Manager has to make sure the engineers are properly trained and so should be coordinating with the Training Manager and making the engineers available when the Training Manager calls for them.

Change FTF to Clean FTF

If your engineers are being dispatched for more than one service call a day, then FTFR is a perfectly good metric.  This occurs when servicing printers, copiers, office equipment, some “small” medical devices, and relatively uncomplicated industrial and laboratory instruments. But when the service call is designed to spill over to two or more days, then I like a different measurement.  I call it the “clean” visit.

Let me explain.  A multi-day service call can result in a first-time fix even though the engineer, the customer, and the service center have to perform heroic efforts to finish the job.  Let's say that a field engineer needs a part that she does not have or has not been sent ahead.  She calls back to the dispatcher who determines that there are none available in the stockroom.  They then discover that one was recently sent to another engineer in another city.  He gets a call and confirms that he has it and does not need it for current jobs.

The engineer has to interrupt his work and tell his customer that he has to leave for an hour or so.  He takes the part to FedEx and ships it overnight.  When the shipping engineer returns to his original job, he finds out that the customer has left for the day and the engineer has to return the next day.  That wasted two hours on the current day.  The next day the first engineer has to go to the FedEx location to pick up the part and head to his customer.  She arrives later than the customer expected because of the delay in picking up the part.  The job gets completed and the service engineer reports the first-time fix.  But two engineers and two customers were interrupted and though the service organization was slightly out of control.

Lesson learned

Unless all disruptions to smooth work are identified, analyzed, and corrected, the service organization will always be disappointing customers and making their field teams lives miserable.

For extended jobs, please seriously consider using the clean visit as the metric to monitor.
If you have a low FTFR and do not have the bandwidth to identify and solve the problems causing the poor performance, please contact me.  We can start with a complimentary one-hour conversation to see if we should further investigate working together on this challenge. 

A Follow-up To A Recent Post About The Changing Nature of Field Service

Sam Klaidman - Thursday, January 19, 2017

A few weeks ago, I wrote a post about the results of my asking our Field Service engineers “What happens if the products never fail?”

Yesterday I read about a new wristwatch that promises no service for 50 years.  The manufacturer is so confident in their claim that they back it up with a 50-year guarantee. Here is the picture from the article:

Reliable watch

They eliminated the need for lubricants which require occasional replenishment by using very low friction advanced materials. Granted that this is a one-of-a-kind situation, but it shows how technology can reduce the need for service professionals.

I believe this is not an isolated example and that as time goes by, we will see more and more of these cases.

As the Boy Scouts say, “Be Prepared.”

A Service Company Grows By Introducing a New Service

Sam Klaidman - Monday, January 09, 2017

All services businesses are trying to grow revenue and profit.  One of the easiest ways to accomplish this objective is to sell a new product to an existing customer. This post discusses a new service being offered in the U.S. by Verizon to its Fios customers.

If the first rule of growing services businesses is to sell new products to existing customers, then the second rule has to be the new products should be “adjacent” to existing services.  And here, adjacent means next to or sharing edges with the first product.  Now let me show you what all this means.

Technical Support at Verizon 

As you might expect, Verizon provides technical support for its network and the components at the end of the “last mile.”  This includes set-top boxes, routers, and telephones.  So, what kinds of products can be supported by an adjacent technical support service?  Take a look at an email offer I received the other day:

Verizon Tech Support Offer

That’s right, they are now supporting non-Verizon products that are generally connected to the Internet. I was curious when I received the email invitation so I click the link and went to Verizon’s website.  Here is more of the story (I added the orange colored cloud box highlighting the new service’s value proposition):

Verizon Tech Support Pricing

Two observations  

First, there is no mention of any qualifications for the people who will answer my calls.  I use a Mac; what do they know about that product?  What about Office for a Mac?  If they are well qualified, then Verizon should tout that fact, even if they say, “We always have both PC and Mac certified techs on call.”  And, of course, there are about one gazillion makes and models of printers, smart devices, and gaming stations that they will support. 

If they are serious about this offer, they should provide real testimonials from real people.  Otherwise, people like me will be very skeptical about the support staff’s capabilities and they will not even probe further.

The second thing I noticed is that Verizon really likes to charge $10/month for its subscription add-on services.  For example, cable companies charge customers different prices depending on the Internet speed they purchase.  Here is the current Verizon offer:

Verizon Prices For Speed Upgrades

Basic Internet service (50/50Mbps) costs $49.99.  The next highest available speed is 100/100Mbps and costs an additional $10.00 and the next available speed is 150/150Mbps at an additional (you guessed it!) $10.00.  Beyond that, the cost increases dramatically because new, expensive routers are required.

Another example is the second router used to extend the Internet signal around your home.  I recently wrote about how easy it was to install and I can now report that it has made a significant improvement in our signal levels in the areas where we previously had poor signal strength.  Here is the advertisement for the device:

Verizon TRent An Extention Router

And the monthly cost is only $10.00.

The problem with charging $10/month for all or most add-ons is that there is no indication of the relative value each service provides the customer.  For example, I feel that a very capable 24/7 support for all my connected devices is much more valuable than a 50Mbps speed increase, which I will barely notice. That lack of price differentiation raises questions that may cause potential purchasers to pass up the offer.


When presenting a new offer in an area where the customer has prior experience with your company, whether it is adding products to Tech Support or a new type of B2B service contract, it is important to convince your prospect that your organization can competently deliver the service.

And your pricing should reflect the value your customer will enjoy and not something that sounds good to Marketing.

If you have any questions or would like to discuss this further, please email me

Bigger Is DEFINITELY Not Always Better When It Comes To Customer Experience

Guest Author - Monday, January 02, 2017

This post was written by my friend Randy Byrne.  His bio is at the end of the post.

Since I – like many – have come to rely on a variety of Microsoft Office products on my notebook PC, mobile phone, and tablet, I pay for an annual support agreement to keep me from spending endless hours trying to navigate a complex auto attendant system when I am desperate for technical support.  Because I pay a premium price, my expectations are high – I expect to be able to reach a competent individual quickly when I need it, I expect to be treated respectfully, and I expect to get my problems resolved in a time efficient manner.

To date, I have used this route for support on multiple occasions, and have generally been pleased though some of the solutions have seemed to take longer than they should have to.  A recent experience was so off-putting that it has changed my view of the value I am getting for the money I paid, and has seriously affected my perception of the Microsoft brand.

As I said earlier – I have three expectations when I pay a company like Microsoft for a premium support package: 

1) Reach a tech support professional, not a gatekeeper, quickly 
2) I want to speak to a technical problem solver quickly
3) I expect the problem to be resolved quickly.

In short, I expect good outcomes from competent people in a very short time and with no hassle.

In my most recent interaction, I got through the automated phone maze quickly – so I was off to a good start and good experience…but then…the customer experience from hell began.  It started innocently enough…with the tech support person from a far away land asking, “what is your 1st and last name?”, and “how are you doing today?”.  After the obligatory greetings, I explained how they could help me today.  I explained that I am using Office 2016 and while in Outlook 2016, I was receiving a message telling me there was a new version available, but when I clicked on “Update,” the update was not completing successfully.  The tech asked if he could take over my PC to do a remote session, and I said “yes.”

Yelling at ComputerFor a total of 7 hours, interactions with two tech reps – and then a manager – the problem was worked on.  Initially, the tech said it should take 15 minutes, and I was very happy about that as I had a lot of work to do that day.  I watched what the tech was doing, and I could see that he was zipping all around my PC but often trying the same thing 3 or more times, to no avail.  I would occasionally ask “how are things going?” and “are we making progress?”, and he said “yes”.  After more than 2 hours, he said the update is working now but it is taking very long for some reason, but since it was ~40% done, we could end the phone call and if I needed to, he gave me a service ticket # and said I could call back.  About 2 minutes after we hung up the call, the update stopped – unsuccessfully – so I had to call back.  By now, 3 hours had been spent and I was no better off than when I started.

I called back and I reached someone quickly again, and the exchange of pleasantries was repeated.  Once again, after a short explanation and my providing the service ticket #, the tech once again asked to take over the PC, and I agreed, with slightly more hesitation.  This Tech proceeded to tell me how the other person had done some things incorrectly, but he was going to sort them.  I observed him moving files around, making copies – all without explanations – and I was getting uneasy that another hour had passed and this guy also seemed to be trying certain things more than 3 times and, more often than not, they weren’t working.  Then, he did the update steps and it worked – voila – and the update progressed much more quickly than the first time.

Now that the update seemed complete before I let him go, I asked him to just check that all my data was still there.  Unfortunately, it wasn’t.  I spend much of my work time using Outlook Tasks, Calendar, Email, and Contacts.  The only thing that was there was Emails.  I pointed this out and he said, “well, have you backed them up?”  I asked him why didn’t he ask this question before doing all this work if there was a risk that data could be lost.  The whole tone of the conversation changed.  He said, “we cannot restore data if you do not have the backup files.”  I had some files backed up but I found out the backup process for Outlook data is not straightforward and is, frankly, a bit convoluted – and the files I had backed up were not the correct ones.

I went back and forth with this person and – try as he may – he could not locate my critical files. After two more hours, I was quickly losing confidence in this person and the way he was racing from file to file, seemingly guessing at things, I told him I wanted to have this call escalated, and I wanted to speak to a manager.  

A manager gets on the line and all he keeps saying – as if it was the standard party line – was “sir, if you don’t have your files backed up there is no way we can restore them”.  I told him “my files were fine before your support lost or deleted them”, and all he would say is “Sir if you don’t have your files backed up….”.  I begged him to get another tech on the line – a high level one – to fix the problem HIS people created.  He refused, saying on multiple occasions “sir if you don’t have your files backed up there is no way we can restore them.”  I was becoming apoplectic – he clearly had given up and was not going to authorize anymore “help.”  I told him what I thought of him – and his team’s so-called “support” – and after 7 hours – resigned myself to the fact that I was going to have to drive 45 minutes the next day (which was Dec. 22) to the local Microsoft store and a busy shopping mall – 3 days before Christmas.

I did this the next day and, after ~15 minutes with a 20-something Microsoft Tech Support guy, he was able to sort out my problem (for the most part) – he restored my Tasks but was NOT able to restore my calendar items – they seemed to have been deleted.

In summary, with my paid Annual Support agreement, I wound up wasting ~1.5 workdays due to the incompetence of the outsourced “Support” function of Microsoft.  It made me wonder what are the drivers or motivation of these remote, “support” personnel.  Are they so driven by metrics that they must take remote control of one’s PC because this is one of the outsourcing organization’s performance measures?  Are they measured by how long they stay on a call with a customer?  I do know this – whenever I have used Microsoft support in the past, it has usually been a decent, if not time consuming, process – and it was ALWAYS followed by my receiving surveys to complete.  I do not believe that it was a coincidence that this time, I received no customer feedback surveys.  It makes me think that when they know you are satisfied with the result, they are sure to send a survey (or multiple ones) to get feedback, but they do not send any surveys when they know you are not.

This most recent experience has really impacted my perception of Microsoft support and of their brand.  I now believe they probably think they are saving money outsourcing the support function, but the quality of their support pales in comparison to a company like Apple, which I have always had consistently high quality, very responsive support from.  With Apple, I just have confidence in the professionalism of their support staff – they instill confidence in their ability to communicate and their competence.  With Microsoft, for some reason, their Tech Support seems more interested in the initial politeness but then taking control of your PC, not communicating anything they are doing, and not showing any sense of urgency.  They are, however, good at “apologizing for the inconvenience” – all three people I dealt with at Microsoft did that. 

Spending 1.5 days of a work week having what should have been a simple issue to sort out is not just an “inconvenience” – it cost me the chance to do a lot more productive activities for my business.  I am now looking for recommendations for a 3rd party Microsoft Office support service based in this country, as I no longer have any confidence – or desire – to deal with Microsoft’s experiment with providing cheap support for their products.  When I need support, I prefer quality instead of quantity (of people).

Randy ByrneThis post was written by Randy Byrne, Founder & President of Transformational Scientific Marketing, a B2B consultancy focused on helping small and mid-size businesses compete with larger, better-resourced competitors via modern & innovative sales & marketing strategies & tactics.  

The Future of Service and Support Jobs

Sam Klaidman - Monday, December 26, 2016

In the early 1990’s, I became the Vice President of Service for Oxford Instruments in the Western Hemisphere.  After taking care of some early logistics challenges, like where should I sit and on what, I set up a meeting for the whole team – remote engineers and in-house technical support.  There were no other overhead people since this was a new organization.

At the close of the first meeting day, I threw out two questions that really resonated with many of the engineers.  I said, “What happens if the equipment never fails?  How do you continue to feed your family?”  During the dinner that evening, we talked a little about what I was thinking about.  And over the next years, I had that same talk with many of the other engineers (usually after they stopped carrying their soldering iron to service calls.)

About 25 years later I still keep in contact with many of these people, including most of that original team.  All are still gainfully employed, but doing things they never thought they could. They rarely fixed products; they installed very complex scientific instruments, trained Ph.D. level users, and provided on-site support showing these users how to use these instruments to solve their problems and collect new and useful data.  They haven’t touched a soldering iron in over 20 years!  And their group at Oxford Instruments has increased, along with a growing installed base, even though instrument failure rate has dramatically decreased.

Why did I decide to write this post now?

I recently watched a TEDtalk, Why Are There Still So Many Jobs? The speaker, Professor David H. Autor, explained the concept of job growth in the age of automation quite simply.  I will attempt to do him justice in the rest of this post. 

We all know this famous quote:

A chain is only as strong as its weakest link

If the chain were to fail, it would fail at the weak link.  Therefore, there is no point in investing to make any link stronger than the weakest link.  Makes sense, right?

Now let us transition to support jobs.  Back in the day, the on-site engineer performed most troubleshooting and repairs.  He was the face of the company and was perceived by the customers as the official fireperson.  If he failed, the whole service organization failed.  He was the weak link in the support chain.  Hence, there was little value in improving the phone support function because the customer’s satisfaction with support was based on the on-site person.

Let’s zoom ahead to the present day.  When a customer calls the manufacturer with a problem, someone on the support desk remotely connects to the product, diagnoses the problem, and overnights a replacement part for the customer to install and return the defective part.  If the support person is effective, the customer is very satisfied.  If the product is still broken after installing the replacement part, then the customer is pissed.  Now the help desk is the weak link.  

This transition occurred gradually over the past 20 years.  This meant that training the field people was valuable since they still had to repair the older products while the help desk supported the newer ones.  And the slow transition pace meant that the hands-on engineers could amass the more cerebral skills required to help the end user better use their product instead of fixing something.  And they were still being productive in their declining break-fix tasks. 

As customers began learning how to better use their purchases, they wanted more hands-on training and consulting. The value being added by the field team quickly exceeded the value from the old style repairs. This value became addictive to customers.  They wanted more all the time. Even though most of the hands-on work went away, there was more customer training and consulting to be done than the displaced engineers could handle.  Applications engineers, who had more technical schooling than the original engineers, were hired into newly created jobs.  These new employees wound up training the engineers since the new hires wanted to share their workload.

And the Sales team began to see that having a very technical person, who was also a good communicator but wasn’t into selling, as part of a prospect sales meeting made a big impact on their close rate.  So, more Applications engineering jobs were created.  And so it goes.

Key Takeaway

As products get more reliable, and remote troubleshooting becomes more commonplace, the hands-on engineers skills must be supplemented so they can perform as Applications Engineers.  This skill upgrade will contribute to employee engagement, retention, and increased sales.  Everyone wins.


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